VINACHEM

Vietnam's public debt is inching up closer to safety limits after its gross domestic product is revised down slightly in an unexpected move.

Speaking at a meeting with the National Assembly's Standing Committee in Hanoi on Monday, Minister of Planning and Investment Bui Quang Vinh did not reveal the new GDP estimate, but confirmed that it is lower, after recalculation.

With the GDP revision, Vietnam's public debt has now risen by 0.9 percentage point to 62.2 percent of GDP, while foreign debt is now equivalent to 43.1 percent of GDP, up 1.6 points.

Regardless of the rises, both numbers are still within safety limits set by the National Assembly, 65 and 50 percent respectively.
The government's debt, which does not include loans taken out by the central bank and state-owned enterprises, has exceeded the 50 percent threshold. It is now equivalent to 50.3 percent of GDP, compared to 48.9 percent earlier.

Although the sustainability of public debt has long remained a concern, the government plans to seek the National Assembly's permission to issue VND200 trillion ($8.85 billion) worth of sovereign bonds in 2017-20.

The loans are meant for funding public infrastructure projects in the next five years, as the state budget will be able to meet only 30 percent of the total cost projection, Vinh said at the meeting.

Transport and agriculture infrastructure, including roads and irrigation systems, will be the focus of development, he said.

At the end of last year, Vietnamese lawmakers approved the government's plans to issue VND60 trillion ($2.65 billion) worth of sovereign bonds at home and another $3 billion in overseas markets this year.